Ill. workers, retirees worry about pension changes

Published: Wednesday, Dec. 4, 2013 10:14 p.m. CDT

Caption

(AP photo)

JoAnn Washington-Murry poses for a portrait Wednesday outside her office at the State of Illinois Department of Children and Family Services in Harvey. Washington-Murry, 60, has spent almost 20 years as a child welfare specialist and her plan was to work another five years or so, then retire with an expected annual benefit starting at about $25,000. Now she's not sure she'll be able to join her husband in retirement that soon.

CHICAGO – Teachers, welfare specialists and other public employees in Illinois are nervous about pension changes that lawmakers approved Tuesday in an attempt to resolve the state's worst-in-the-nation pension crisis.

Among their bigger worries is a change in the cost-of-living increase, which currently is 3 percent compounded annually on their full annual benefit. Under the new plan, retirees will receive the 3 percent increases only until their annuity reaches a certain amount. That will limit their annual pension payments – dramatically in some cases – compared with what they would get under the current system.

Lawmakers who supported the changes say they protect the longest-serving and lowest-income retirees while helping to resolve the state's $100 billion pension shortfall.

Here are some employees' stories:

• • •

JoAnn Washington-Murry has spent almost 20 years as a child welfare specialist with the Illinois Department of Children and Family Services, making sure that kids in foster care and institutions are not abused or neglected. Her plan was to work another five years or so, then retire with an expected annual benefit starting at about $25,000.

Now she's not sure she'll be able to join her husband in retirement that soon.

The couple still has about 18 years left to pay off their house, which is worth less than they owe. And with a combined mortgage and property tax payment of about $24,000 a year, they might have to consider selling unless she keeps working longer than she wants to, Washington-Murry said. Her husband retired two years ago and is on a fixed income.

"That's the only way I can see it," said Washington-Murry, 60, of the Chicago suburb of East Hazelcrest. Based on her projected retirement benefit and 25 years of service, she could receive a cumulative $30,000 less over the next 18 years under the new pension plan, she said.

"I had factored into the future," based on the current pension system, she said. "It's just really scary right now to think about how we are going to do this.

"We might need to start looking now for another home, or I can keep working until the mortgage is paid."

She said she is upset that the state's pension mess got this bad.

"We paid our fair share of our pension; it's the state that has not put in what they needed to," she said. "People are feeling like they're just violated, like someone stole their money for retirement."

• • •

Barb Gilhaus said she never regretted her decision to work as a home economics teacher at a small rural school, even though the pay wasn't the greatest.

"I loved getting up and going to work every day, but was promised a [certain] pension when I retired," said Gilhaus, 73, who taught for 32 years in the Heritage School District in Champaign County before retiring in 1993.

Gilhaus, who lives in Downs, outside of Bloomington, won't be as drastically affected by the new pension system as younger or higher-paid retirees. She now receives a pension of $30,000 a year and will continue to receive the 3 percent cost-of-living increases for a few more years, or until her annuity reaches $32,000 – her years of service multiplied by $1,000. After that, the retirement increase will start dropping below what it would have been under the current system, perhaps by several hundred dollars in total over the next 10 years.

But she said she and her husband count on every penny to make ends meet.

"It's not like we live high on the hog; we take a vacation once every five years and save up in order to do that," she said. "I don't care whether [the reduced benefit] is 5 cents or $5,000 a year, it's still a cut in my pension and it's important to me."

She's also angry that the legislature is considering tax breaks for companies such as Archer Daniels Midland while lowering pensions for its own retirees.

"They're robbing from Peter to pay Paul," she said.

• • •

Ellen Larrimore had already done the math for retirement.

She has worked for seven years as a library specialist at Northeastern Illinois University and planned to retire in three years with an annual retirement annuity starting at about $15,000 – not a lot, but with some income from other sources and annual cost of living raises, she could get by.

But under the pension bill passed by the legislature, she stands to receive more than $40,000 less over 20 years than she would under the current system and might have to reconsider when she retires.

"If your pension is not keeping up with inflation, the older you get, the poorer you get," said Larrimore, who said many workers fear their retirement incomes won't keep up with Medicaid and Medicare changes.

But Larrimore said she's most worried about younger workers who will face reduced benefits and have to work longer before they can draw a pension.

"A lot of people on campus are living paycheck to paycheck," said Larrimore, noting that university workers won't be eligible for Social Security. "People think we get luxurious pensions, but that's not the case at all. It's very modest."